Points to Consider When Moving HR Applications to the Cloud

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In 2016, US companies invested about $1.96 billion on HR technologies according to CB Insights. While a big chunk was invested in Human Resource Management System (HRMS) platforms, emerging technologies like mobile, cloud computing, Artificial Intelligence and social media were also major beneficiaries. In 2017, cloud is expected to be the biggest attractor of HR Technology investments, followed by payroll management solutions and benefits administration solution.

A recent PwC’s Human Resources Technology survey titled "What’s now and what’s next in human resources technology" reveals that 40% out of the 300+ companies that they had surveyed have moved core HR applications to the cloud. About 73% had at the least one process in the cloud. Nearly 33% of the companies who were still using on-premises HR applications, were actively planning to move to the cloud in the next 12 to 18 months.

While migrating HR applications to the cloud seems inevitable, the wholesome acceptance is due to the benefits provided by the cloud in helping HR departments serve the workforce in a better way. The cloud has enabled the provision of self-service HR tools. As a result, 52% of the respondents said that employee usage of these tools has increased, with 47% saying that these tools were being regularly used by the employees. Out of those who succeeded, many had a solid business case for the migration with a clear definition of expected results.

The satisfaction levels with the cloud implementations has also increased, with 78% of the respondents saying that their cloud products met their business needs. Quick releases and software innovation were the top motivators to migrate to the cloud for 70% of the respondents, while 50% moved so that they will have to depend less on the IT department, and for 44% the cloud ensured a lower cost of ownership.

About 58% of the respondents (the highest percentage) have recruiting applications on the cloud and 23% were planning to migrate their recruiting application to the cloud in the coming 1 to 3 years. While 38% were planning to move their talent review and succession solutions to the cloud, 35% were planning to move their on-boarding solutions and 34% were planning to move their HR analytics solutions.

According to PwC, organizations should consider the following points when they build their case and plans for moving to the cloud:

Start small: Organizations planning to move to the cloud should start by focusing on just one or a few HR processes, as this helps focus resources and energies. They can slowly expand to other processes.

Mobile: With the widespread use of mobiles and its ability to drive positive user experiences, enabling mobile capabilities in the cloud applications should be planned at the very beginning.

Schedule: When organizations workout the timeline for their cloud implementations, they should consider factors like past experiences with similar projects, decision making process, availability of dedicated resources, and more. While these factors have a major impact on the time line, they vary for each organization. Hence, basing implementation timelines on the basis of other organization's experience may not work.

Internal Resources: The unavailability of internal resources was one of the top 3 major implementation challenges in 2017 according to the PwC survey. Internal resources are important as they have a better understanding of the business requirements. But, the availability of these resources could also affect the timeline of the implementation.

Costs: While the SaaS-based or subscription fee based models bring predictability to the costs, organizations should not be aggressive in reducing headcount to save costs. The survey revealed that different organizations had different experiences when it came to headcount. Therefore, the business case should be pragmatic, and based on the past experiences of the organization.

PaaS: Platform-as-a-Service (PaaS) allows organizations to add new features by extending their SaaS functionality. These extensions usually do not conflict with software updates and help fill critical functional gaps. PwC recommends that organizations should budget for such extensions when they make their business case for a cloud implementation.

Cloud vendors have also improved the capabilities and quality of their solutions/ applications of the years. As a result, the percentage of respondents citing software bugs as a top issue has fallen to 24%, with 67% respondents being happy that their requirements were met "out of the box".